On the 12th of February 2013, North Korea conducted its third nuclear test – it seems to have been significantly more powerful than the two previous tests, which occurred respectively in 2006 and 2009.

While the international community went through the usual motions of condemnation, there was an air of despair in Washington. Analysts have come to realize that little of any practical value can be done about North Korea’s nuclear program. Engagement, attempted in the 1990s, did not succeed. Hardline, sanctions-based approaches have also failed quite spectacularly.

It is not surprising, therefore, that in the present circumstances there has been a palpable revival of the ‘China Dream’ – i.e. the belief that China can be somehow persuaded to change its hitherto grudgingly tolerant approach to North Korean nuclear program, and bribe/blackmail North Korea into surrendering its nukes. Indeed, China controls roughly 75% of North Korea’s external trade, and provides nearly all of Pyongyang’s aid, so it seems to have all necessary leverage.

These hopes were recently encouraged by the palpable cooling of relations between Pyongyang and Beijing. Last August, China politely declined North Korea’s request for a significant increase in aid, and at the same time, China also allowed a big Chinese mining company who had been cheated by its North Korean partners to voice its dissatisfaction publicly and loudly. In January, much to the surprise of most observers, Chinese representatives in the UN Security Council supported a resolution highly critical of Pyongyang. Soon after this, a Chinese newspaper carried open threats to reduce aid to North Korea from Chinese government sources.

All these expectations were proven wrong however in the aftermath of the third nuclear test. The Xinhua news agency was quick to put the blame for the test on the “hostile policies” allegedly pursued by the Japanese and American ‘imperialists. While Chinese diplomats uttered the ritual condemnations, there is little doubt that in spite of the changing of the guard in Beijing, China will remain tolerant and forgiving of North Korea.

We should not be surprised by this, since hopes in China were misplaced from the very beginning. It is indeed true that China has the theoretical capability to corner the North Korean leadership; it is highly unlikely that such capabilities will ever be utilized. China does not approve North Korea’s nuclear adventurism. It is also hardly fond of North Korea’s brinksmanship tactics. However, all things considered, China tends to see a nuclear North Korea as the least unacceptable option.

With regard to Chinese dealings with North Korea, one can define three strategic goals, which are pursued by China. These goals can be described as “the three no’s”: “No Instability, No Unification, and No Nuclear Weapons”. Unfortunately for the outside world, these three goals are clearly hierarchical, with the de-nuclearization being at the bottom of the list.

The preeminent goal of China is preventing instability in Korea. China would not welcome either a domestic crisis in North Korea, or an outbreak of hostilities in region. The implosion of the North Korean regime will send hundreds of thousands (perhaps, millions) of refugees across the poorly protected Sino-Korean border. It may lead to aggravated tensions between China and the United States as well as to the smuggling of nuclear materials. It will also clearly be a distraction for China as it seeks to continue its unprecedented economic growth. China therefore needs a stable Korean Peninsula.

Second, China would prefer to see a divided Korean peninsula. North Korea is an important buffer zone. There is little doubt that a unified Korean state will be dominated by the South and is likely to be democratic and nationalistic, as well as probably still an ally of the United States. As a Chinese border official recently told the present author, “If Korea is unified by Seoul, we will have to spend much more money on fortifying and controlling the border than we do in feeding these imbeciles in Pyongyang”.

The third goal is, of course, denuclearization. Being an officially recognized nuclear state, China is a member of a highly exclusive club that it does not want to see enlarged. It does not want North Korea’s nuclear program to contribute towards nuclear proliferation or trigger a nuclear arms race in East Asia. However, these worries seem to be quite theoretical at the time of writing, especially if compared with the worries about a coming collapse of the North Korean regime and its potential fallout.

Therefore, Chinese policy towards North Korea is, like most policies, the pursuit of a lesser evil. China would probably prefer a stable and divided non-nuclear Korean Peninsula. As it has to compromise though, it would prefer to jettison the dream of denuclearization for the more important goals of stability and division.

This is exactly the reason why China is not going to press North Korea too hard. It can theoretically reduce the amount of aid, or even curtail trade with North Korea. This would lead to economic problems and decline in living standards – an outcome which would be an anathema for nearly all governments worldwide. However, as experience has shown, the North Korean regime has been remarkably immune to such changes.

The North Korean government can ignore the suffering of the population and the population will have no way of influencing the decision-making or expressing its discontent (we have seen this during the great North Korean famine of the 1990s when at least half million died quietly).

Therefore, in order to achieve the desired result, China would have to take drastic steps, halting aid altogether. As a senior South Korean diplomat told the present author a few years ago, “China does not have leverage when it comes to North Korea, rather it has a hammer. It can knock North Korea unconscious if it wishes.”

However, China has good reasons not to wield this hammer. Even if such drastic measures spur North Korean leaders to surrender their nuclear weapons, there is a very high probability that such measures will bring about the dramatic and irreversible disintegration of the North Korean state, followed by violent crisis and perhaps the absorption of the North by the powerful and affluent South. And this is clearly not what China wants.

In other words, China faces a choice between a relatively stable (for the time being), but nuclear North Korea, and a non-nuclear, but very unstable North Korea. Up until now, Chinese decision makers have had the view that the first scenario is better for China’s long-term interests. Unfortunately for the outside world, they are probably right in their assumptions.